Ep. 13: Kirstie Tiernan - Investigative Accounting in Today's Industry

Kirstie's Resources:


Tax Transformation Guide -
https://www.bdo.com/thought-leadership/tax-transformation-guide 

Digital Transformation Survey -
https://www.bdo.com/thought-leadership/digital-transformation-survey

Insight First Innovation -
https://www.bdo.com/insights/business-financial-advisory/strategy,-technology-transformation/insight-first-innovation 




FULL EPISODE TRANSCRIPT


Adam: (00:05)
Hello and welcome back to another episode of Count Me In, IMA’s
podcast about all things affecting the accounting and finance
world. I'm your host, Adam Larson and today we're going to hear
my cohost Mitch Roshong's conversation with the managing director
in BDOs Chicago office, Kirstie Tiernan. First. As a reminder, if
you're enjoying what you hear on, count me in, please make sure
to subscribe, download rate and review all podcasts. Feel free to
share your comments with us in the review section of the episodes
or just send us an email now, Mitch, learning that Kristie has
over 15 years of experience in data analytics and it advisory,
what was she able to share during your conversation?

Mitch: (00:43)
Kirstie is a certified fraud examiner and an Oracle certified
associate. She is experienced in managing fraud detection and
prevention analysis projects and was able to share a lot of real
life examples about some of her work with her clients. As you
said, she has a strong background in IT, so she is a big
proponent of researching and implementing technology to enhance
various accounting services. We talked about how these
advancements have improved the services she's able to provide as
well as how it's changed the investigative work she needs to do
with her clients. At the end of the conversation, Kirstie adds an
intriguing prediction about what is next for the future of
accounting. She's an engaging speaker and established and
extremely successful professional. And someone I really enjoyed
speaking with. Have a listen for yourself as we'll now go to the
conversation.

Mitch: (01:30)
From your experience with digital forensics and eDiscovery
services in the recent years, what kind of impact has this
technology, the AIRPA had on fraud in the accounting
industry?

Kirstie: (01:50)
Well, for forensic accountants in the increasing role of data
that we have in business and in everyday of our lives and how
much data is being created, that really just creates such a scope
of potentially relevant evidence for investigations around and
digital forensics need discovery. So I think the fact that the
data is growing so exponentially so quickly, that's probably for
forensic accountants, one of the biggest issues and one of the
biggest impacts of technology is really had. With that though
goes all of these new tools and all of these new ways and
methodologies and using AI and machine learning, all these
different things that we can utilize to call that data town. So
where in the past for an eDiscovery project where we were looking
at a lot more data, now we're using analytics, predictive coding,
a lot of different tools to really narrow down on exactly what
those relevant documents are and how we can review those most
efficiently. So from my experience and going in digital forensics
and you just go around that side, I'd say the impact that
technology has really had been that and allowing us to review
those very large sets of data very quickly and it's made it a
little bit more difficult now that we have those tools for
fraudsters to do the same old tricks. Right? So it, it does
create a bit of a deterrent for the same fraud. You know, that's
been created time and time again. However, with that also comes
the risk that AI and some of these algorithms are allowing
fraudsters to also develop their schemes. So it's technology, the
impacted in both directions and we just hope that we can keep up,
you know, with, with the way that the fraudsters are using it by
detecting and quicker and using all these different new tools,
statistic tools and analysis to really be able to identify these
anomalies that are being created by fraudsters and new
schemes.

Mitch: (03:54)
And how about with these tools, through your investigations, what
kind of positive results have you recognized because of these
different advancements and capabilities? In other words, what
type of key business decisions or conclusions have you kind of
been able to lead your clients to? Um, because of these
accelerated processes.

Kirstie: (04:13)
So we have a lot of clients that maybe they know about a fraud
that's going on and the typical issue is, okay, we're going to go
investigate that. But our concern is what else is going on that
we didn't know about? Right. And now we've got a ton of email
data. We've got accounting system data, we've got POS data, we've
got all this, this data that exists that we could search for
where things could be happening that we're not even thinking
about looking for yet. And so I think what AI has really allowed
us to do is when a client comes to us and says, yeah, go
investigate this, but what else is going on? We're now able to
use those tools and that technology to go through those large
sets of data. And so we have a, we had a client on too long ago
where they came to us and that was this exact issue and they said
what else could be going on? They said, just take a peek at the
data and take a high level view of it somehow and tell us what
else we should be looking at. So we ran a, through some of our,
in an anomaly, we have a fraud detection algorithm we use and we
look at it at the GL data. So the journal entry data by account.
And we assess the risk by account using this algorithm. And what
it's able to do is bubble up the top these transactions that look
different than others, right? So you have all these transactions
hitting revenue for instance, and then all of a sudden see
something differently when you're talking about a client that has
10 million journal entries a month, it's impossible to run a
round dollar analysis or show me all the payments on the
weekends, that kind of stuff. To find this fraud, you need
something bigger and something that can handle a lot more of the
data sets that we're dealing with. So when we had that client
come to us and give us three years of data and 2 million journal
entries month, we were able to push it through that algorithm.
The algorithm came back and it highlighted certain accounts of
high risks year over year. And so we, what we did is we went back
to the client and I said, okay, here are the top 10 high risk
accounts that our tool is seeing. And one of the top one was a
liquor tax and they had never had liquor tax in their review
items. So that account kind of popped to the top and it was
something that allowed us to further investigate, but something
that they hadn't initially really reviewed in their typical
internal audit process.

Mitch: (06:36)
And how about something that may not be fraud related? What are
some of the positive results that you've been able to, you know,
advise clients? Again, maybe something like process efficiency or
you know, something where a tech has been able to just improve
overall business functions.

Kirstie: (06:54)
Yeah, I'd say the biggest area for our clients right now is
focused on tax transformation and tax automation. So within a lot
of our clients tax teams, there's nev...